Tax change is biggest issue for UK buy to let landlords

Tax change is the biggest issue for buy to let landlords in the UK with many having concerns about how they will manage their business with the changes to mortgage relief finance.

But they should not worry about it, instead taking it as part of the cost of running a business, the Property Wire panel debate on the future of buy to let in the UK heard.

The debate panellists stressed that buy to let is a business, and needs to be run as a business. They encouraged landlords to adopt an attitude that they are in it to make money and therefore they need to make sure they are on top of their costs.

There was a suggestion that London based landlords could look outside of the capital if they are expanding their portfolios in order to improve their yields but there is always the consideration that being near the property you let can be beneficial in terms of building a relationship with tenants and keeping an eye on the property.

But there is no doubt that finding a property at a lower price could be cost effective in terms of paying less stamp duty, achieving higher yields and potentially benefitting from higher capital growth.

Tony Gimple of Less Tax for Landlords, said he believes that landlords should concentrate on yields foremost rather than capital growth and let the economics speak for themselves. He is a firm believer that tax changes just need to be accepted as part of running a business and he does not think the raft of recent changes will put landlords off from investing in the future.

Whether London landlords should look outside of the city for future investment was the subject of intense debate. Richard Blanco, himself a landlord with several properties in London, is not in favour of investing in other cities even although he described the London rental market as ‘dysfunctional’. Blanco, who was also a representative of the National Landlords Association,

There was discussion about the effect of changes on the value of rents and Paul Mahoney, founder and managing director of Nova Financial, explained that it is the market that will determine the rent not what a landlords think they can charge.

Mahoney also pointed out that yields are important in the current market and he believes that cities other than London can make better financial sense, citing Manchester, Birmingham and Liverpool as examples.

There was plenty of advice for landlords on insurance and replying to a question from the audience about Airbnb being an option, they collectively dismissed the idea in London where there is a 90 day limit on renting short term. They also pointed out that such a move could affect insurance and mortgage conditions.

Andy-Wynne Jones, senior underwriting manager at Simple Landlords Insurance, provided plenty of advice. He explained that landlords can save money if they take on risk by looking at their policy excess levels, perhaps accepting a higher excess for lower monthly insurance payments.

There was a general consensus that Brexit is an unknown entity at presents with it virtually impossible to say how it might affect the private rented sector in the UK. The overwhelming conclusion was that landlords need to take change in their stride and remember that they are running a business and adopt the necessary strategies to make it a successful one.